CANADA STOCKS-TSX slips as geopolitical, economic fears resurface

* TSX down 32.70 points, or 0.27 percent, at 12,145.68
* Eight of 10 main index sectors decline
* RBC drops, has biggest negative influence
* Gold-mining shares rise with bullion
By John Tilak
TORONTO, July 3 (Reuters) - Canada's main stock index
dropped in volatile trading on Wednesday as political turmoil in
Portugal and Egypt coupled with sluggish data out of China to
stoke investor worries about the global economic recovery.
Higher bullion prices pushed up gold stocks and crude oil
prices shot up on Middle East tensions, but failed to provide
much support to energy shares, which edged higher.
Investors had much to process on Wednesday as Egypt's armed
forces overthrew elected President Mohamed Mursi and announced a
political transition with the support of a wide range of
leaders.
Meanwhile, political turmoil in Portugal drove Lisbon's
bourse to its worst day in three years and threatened to
reignite the euro zone crisis.
Also on Wednesday, data showed China's services sector
expanded only modestly in June with the vast construction
industry acting as a drag on growth, a further sign that the
world's second-largest economy is losing momentum.
The resources-heavy Canadian market's dependence on the
global economy because of the commodities it exports makes it
vulnerable to any such bumps on the road.
"It's a combination of geopolitical and macroeconomic
uncertainty," said Elvis Picardo, strategist and vice president
of research at Global Securities in Vancouver. "That is weighing
on the TSX because the index is a proxy for global growth."
The market is also awaiting the influential U.S. nonfarm
payrolls report on Friday.
"The U.S. jobs numbers have been quite pivotal in
determining market direction," Picardo said, adding investors
would like the jobs numbers to "hit the sweet spot."
The jobs numbers should not be "too low to raise concerns
about a potential slowdown in the United States," or "too strong
to cause more fear about the Fed tapering the quantitative
easing program."
In Europe, Portuguese 10-year bond yields topped 8 percent
and its stock market sank after the country's president summoned
main political parties for crisis talks over the government's
future. The market fears a snap election could derail Lisbon's
exit from an international bailout.
But Lorne Steinberg, president of Lorne Steinberg Wealth
Management in Montréal, said investors should look past the
current crisis.
"Portugal is not Greece. This is just a blip on the screen
... Europe is past the worst," he said. "In three to four years,
Europe will be back to some kind of sluggish growth."
The Toronto Stock Exchange's S&P/TSX composite index
closed down 32.70 points, or 0.27 percent, at
12,145.68.
Eight of the 10 main sectors on the index were in the red.
Financials, the index's most heavily weighted sector, were
down 0.4 percent. Royal Bank of Canada, the country's
biggest lender, fell 0.6 percent to C$60.55 and played the
biggest role of any single stock in leading the market lower.
Toronto-Dominion Bank lost 0.3 percent to C$84.51.
Shares of telecommunications providers dropped 1.3 percent,
with Rogers Communications Inc down 2 percent at
C$41.52.
The materials sector, which includes mining stocks, advanced
1.1 percent. Shares of gold producers jumped 1.3 percent as the
price of bullion climbed.
Barrick Gold Corp added 1.2 percent to C$15.51, and
Goldcorp Inc gained 2.7 percent to C$26.02.
Shares of energy companies were up 0.2 percent. Canadian
Natural Resources Ltd climbed 2.3 percent to C$30.99
and had the biggest positive influence on the market.